Vino Maestro Ltd.

Wine Store Business Plan

Strategy and Implementation Summary

Location is critical to attract the traffic and customer profile required to generate planned sales volumes. The business is highly territorial. We have mapped the location of every retail liquor store in Boston, and we have been working with executives of Castle Real Estate Company to determine the best possible location for the store. Four target areas were identified: the newly developing Southside residential complex downtown, the Jefferson Park area, the Shoehorn district, and the Princeville area. Among these target areas, Southside Towers has been identified as our most promising business opportunity.

Exclusivity within Southside Towers is a significant competitive edge. It gives Vino Maestro geographic and protected domain as the most convenient source of fine wines and spirits for over 3,000 current residents and up to 14,000 additional future residents.

Seasoned executive management professionals, sophisticated in business knowledge, experienced in the wine and spirits trade.

Sales staff with wine and spirit education credentials.

4.1 Competitive Edge

Marketing strategy will focus on:

Developing a reputation for great selection, an appealing store environment, competitive prices, and excellent customer service. This should engender strong word-of-mouth advertising--our most potent form of advertising.

Developing strong relationships with our suppliers to help insure best discount deals and best supplier services obtainable.

Keeping the staff focused, satisfied and important in their roles--to help keep our productivity and customer service at the highest obtainable levels.

Maintaining an awareness of our store through regular advertising to our target community. This may be in any combination of media--newspaper, direct mail, in-store ads and brochures, online ads, radio, and/or television.

Reaching out to potential wholesale clients--businesses and community organizations.

4.2 Marketing Strategy

Product pricing will be based on competitive parity guidelines. Prices will be consistent with those of the retail stores in our area, with the exception of very high-volume operations who have more powerful pricing leverage.

Pricing will be monitored continuously against neighborhood and other competitive sources (market leaders) who we can readily research.

4.3 Sales Strategy

Management will focus on daily sales revenue goals.

Best value products will be identified to assist customers with smart selections.

Deliveries will be geared to the customer's convenience. The situation will be monitored to insure that the company invests adequately in its own delivery operations.

Major accounts will be solicited through networking, neighborhood solicitations, and opportunistic encounters at any time by management.

4.3.1 Sales Forecast

Sales projections for Vino Maestro are based on: actual sales of Season's Best Wine & Spirits, A&A Wines, Avenue Wines, interviews with liquor store owners and managers, observations of store sales and traffic at Friendship Wines, Pelican Place, and various other retail stores in Boston, government and industry trade statistics, and population demographics and projections envisioned in Southside Towers construction plans.

Regarding wine revenue potential, we are forecasting average sales of 15 bottles per capita per year for residents of Southside Towers, and an average retail price of $15 per 750 ml bottle. Trade statistics show that, on a national basis, 10% of the population is responsible for 90% of alcoholic beverage consumption. The "average" Southside Towers customer, representing 10% of the Southside Towers population, therefore, would be expected to purchase three bottles of wine per week from our store. With Southside Towers growing from a base of 3,000 to 17,000 residents, we see wine revenue potential from these residents in a range of $675k to $3.8 million over the course of the full development of the Southside Towers project.

The balance of our forecasted wine sales, representing some 20% of total wine sales, will come from sources external to Southside Towers: catering services, corporate accounts, deliveries to consumers outside Southside Towers, and visitors to the Southside Towers complex of residences, stores, and park situated on the NY harbour waterfront.

Sales revenue of spirits are projected to be 10% of wine sales, based on interviews with Boston store owners with a similar array to the product mix we have planned.

About 40% of annual sales are expected to occur in the November-December holiday period. This is in-line with the retail liquor store norm and confirmed by owner interviews and trade statistics.

Wine consumption has been growing in terms of sales volume some 8-10% annually for the last decade. This trend is expected to continue and perhaps increase to up to 12% in the next 15 years. Spirits sales will tend to remain flat during the same time, with the exception of tequilla, vodka, and rum. Our forecast assumes a 7% annual growth in total wine and spirits sales per capita.

Assuming a plan fiscal year beginning July 1, 2001, we estimate the Southside Towers population to increase 1,000 residents per year in-line with current construction and occupancy estimates provided by agents for Southside Towers.

Sales Forecast

Year 1

Year 2

Year 3

Sales

Wine

$840,000

$1,200,000

$1,500,000

Spirits

$84,000

$120,000

$150,000

Other

$0

$0

$0

Total Sales

$924,000

$1,320,000

$1,650,000

Direct Cost of Sales

Year 1

Year 2

Year 3

Wine

$509,091

$727,273

$909,091

Spirits

$68,852

$98,361

$120,968

Other

$0

$0

$0

Subtotal Direct Cost of Sales

$577,943

$825,633

$1,030,059

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4.3.2 Sales Programs

Sales staff will have a level of wine and spirits knowledge that will position Vino Maestro to address customer needs better than our competition. The company will support high potential sales staff with education tuition assistance, and we will recruit our sales staff from students of wine education institutes.

One of the managing partners is musically talented and will use his skill to create programmed background music to enhance store ambience and stimulate sales. This music will have the potential to be copyrighted and tested as a stand-alone marketable product, similar to CD's sold by Starbucks and Pottery Barn. The store layout will be planned with a commercial interior designer, to present an upscale, festive, cosmopolitan and culturally sophisticated image.

A proprietary website address has been registered, and a website will be built to enhance customer service, supplier commerce, and direct sales. Vino Maestro will take advantage of this opportunity as much as possible within budgetary limits.

A sophisticated proprietary software tool will be developed to enhance the customer buying experience with product knowledge matched to our customers' tastes and preferences.

4.4 Strategic Alliances

Vino Maestro will seek out opportunities to establish viable strategic alliances, such as co-marketing with gourmet food operations, wine and spirits distributors, importers, and producers. One such opportunity, and a natural fit, is an alliance with the upscale goumet food market that will occupy a neighboring retail storefront on Mainline Avenue, within about 100 feet from our storefront. Packaging party catering and event food services with a complement of fine wines and spirits from Vino Maestro will help promote both businesses and provide an extra measure of service to our neighborhood customers. Coordinating gift baskets with wine orders in a single delivery package presents another compelling co-marketing opportunity. Information specific to pairing wines with food can be used to stimulate sales as well.